Palestinian Authority Finance Minister Shukri Bishara announced a series of austerity measures on Sunday that the Ramallah-based Palestinian leadership says are necessary to confront a budgetary shortfall.

Bishara made the announcement after the PA refused to receive tens of millions of dollars in tax revenues last month that Israel collected on its behalf, to protest a new Israeli law that seeks to push Ramallah to end its policy of issuing payments to security prisoners, including terrorists, and the families of dead terrorists.

The law allows Israel to withhold taxes it gathers for the PA by the amount Israeli officials estimate it gives to what has been nicknamed “pay for slay” funding.

Outgoing PA Prime Minister Rami Hamdallah said in late February that the Jewish state withheld last month NIS 41,800,000 ($11,516,000) of its monthly transfer of taxes to Ramallah. Hamdallah said that in response, the Palestinians rejected all tax funds from Israel.

PA President Mahmoud Abbas has said the Palestinians will not accept any part of the taxes that Israel gathers on its behalf in future months as well, if the Jewish state does not transfer the full amount to Ramallah.

Bishara told a Sunday press conference that a team of Palestinian officials led by Abbas had decided that until Israel hands over the entirety of the tax transfers, the PA will pay its employees who earn below NIS 2,000 ($550) their full monthly salaries, but its other workers will only receive part of their wages and no more than NIS 10,000 ($2,760).

Palestinian Authority government meeting in Ramallah on December 27, 2018. (Credit: Wafa)

“We will spend money in accordance with our priorities in a logical, rational and just manner and in a way that does not impact the services provided to citizens,” Bishara said, noting the team led by Abbas could amend its decision in future months depending on changes in the PA’s finances.

Approximately 40 percent of PA workers receive monthly salaries amounting to less than NIS 2,000.

He also said that all PA employees would receive at least half of their salaries on Sunday.

The PA has long paid tens of thousands of Palestinians in the West Bank and Gaza Strip monthly wages.

Bishara added that the austerity measures also include the PA stopping all appointments, promotions and bonuses; halting all new property and car purchases; and cutting expenses on travel, hosting guests and fuel.

The PA undertook similar moves in 2012 when Israel withheld taxes from it over Palestinian efforts to gain international recognition.

The taxes Israel gathers for the PA account for about half of Ramallah’s budget, while international aid, which has dramatically decreased in recent years, and local duties make up the rest.

Bishara also stated that PA Foreign Minister Riyad al-Malki will reach out to Arab banks, Islamic funds, the Arab League and China “to activate” a financial safety net for the Palestinians.

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